Tabby, the Dubai-based company that allows people to make online purchases instantly and pay for them later, raised $23 million in initial venture capital funding led by Arbor Ventures and Mubadala Capital.
The company said in a statement that the money will be used to finance the next stage of development of the company and help it “materially scale its product and engineering capabilities.”
“The shift to online retail has never been more evident. Consumers are becoming ever more demanding as they actively seek convenience and reliability in their shopping experience. And this includes how they pay for their purchases,” Hosam Arab, the company’s co-founder and chief executive, said.
Established last year, Tabby has agreements with a range of large retail groups, including Ikea, Toys R Us, Ace Hardware, and other Al Futtaim Group and Landmark Group-operated brands. It allows shoppers to delay payment on transactions made either online or in-store for 30 days or to pay in four monthly instalments at no extra cost.
The company says its service integration will help increase retailer sales conversion rates by over 20 percent and increase transaction sizes by 30 to 85 percent. Tabby has already committed to a partnership with Visa and entered a regulatory sandbox run by Saudi Arabia’s central bank.
STV, Raed Ventures, Global Founders Capital, Jimco, Global Ventures, Venture Souq, Outliers VC, MSA Capital, HOF and Jordan’s Arab Bank are the other investors who participated in the initial Series A funding round.
Tabby is “the leader in buy now, pay later” in the Middle East and North Africa region, said Melissa Guzy, managing partner at Arbor Ventures. The region itself is “at a tipping point” in terms of the growth of digital payments, she added.
“Buy now, pay later solutions are booming globally thanks to accelerated payments digitisation and eCommerce penetration, and the Middle East is no exception. Tabby’s solution fits squarely within our thesis that FinTech solutions will drive better experiences for merchants and consumers,” said Ibrahim Ajami, head of ventures at Mubadala.
Investor interest in buy now, pay later firms is also booming. Europe’s biggest player, Sweden’s Klarna, raised $650 million in a funding round led by US venture capitalist Silver Lake and Singaporean sovereign wealth fund GIC in September. In the same month, US-based operator Affirm founded by Max Levchin raised $500 million in a late stage funding round backed by Durable Capital Partners.
Mr Levchin had sold a previous company to PayPal, which has itself launched a ‘Pay in 4’ service allowing customers to spread payments over a four-month period.